Case Study 1 Clean Edge Razor

Case Study 1Clean Edge Razorby Sarah Mohamad nOr

Utm klPresentation outlineIntroductionIssuesAnalysis of Marketing StrategyRazor Market AnalysisMarketing Strategy Analysis

Marketing Solutions

IntroductionNon-Disposable Razor MarketConsumer

Frequent brand switchingReplacement cycle shortened since consumers trying new products &

67% Involved Non-Disposable Razor Users

Market Trend

5% growth per yearIn sales of Non-disposable Razors from 2007 to 2010

Significant growth in Super-Premium SegmentDriven by product innovation

Male-specific personal care productsbecame more mainstream

Competitor

Continuous Innovation in non-disposable razor category

Expansion of Advertising and Promotion Expenditures

Intensify competition to obtain retail space

Distribution Channel

Outlets Increase Shelf Space for non-disposable razor category.

Shift of distribution channel from Food & Drugs stores to Mass Merchandisers

The dilemma

Primary IssuesWhere should the Clean Edge Razor be positioned?

IssuesNicheMain StreamSecondary IssuesBrand name positioning of Clean Edge Razor

Separating Clean Edge from existing Product LineAssociating Paramount to the brand as part of overall Corporate Strategy to build Paramount brand equityClean Edge by Paramount Paramount Clean EdgeRazor market Competitive mappingBenet & KleinVitric AdvancedVitric MasterPrinceCogentCogent PlusValueRadianceNaivSimpsonsTempestBenet & KleinVitricParamountParamount ProParamountParamount AvailModerateSuper-PremiumMarket Share - by Market Segment

Razor market AnalysisMarket Share by Brand

Source: Exhibit 5Razor market AnalysisSales by Segment

Source: Table BProduct SegmentVolume (%)Dollar (%)Volume to Dollar RatioSuper-premium25341 : 1.4Moderate43441 : 1.0Value32221 : 0.7Although Moderate Market captures the highest percentage of volume and dollar value, the super-premium gives the higher return in terms of dollar value per volume produced. On the other hand, value market segment gives lower market value per volume produced.Razor market AnalysisSWOT AnalysisStrength

Opportunity

Established brand that consumers already trust and hold strong and positive association with.Paramount can afford $19 million in advertisingBest product in the market (Technologically advanced and tested)Nothing currently in the market like it.

Growth in the super premium segmentMainstream market is highly profitable.Increased in mens grooming.Uninvolved razor users (maintenance users) is untapped consumer base.

Weakness

Launching the Clean Edge Razor in the wrong segment could potentially canabilise the Paramount Pro.Does not hold a position in the super premium segment of the mainstream market which accounts for 37.2%of the total non-disposable razor market.Competitors in the market may released similar products.Naiv, a competitor brand of non-disposable razor has similar vibrating technology to Clean Edge.

Threat

Positioning in the Mainstream market could lead to cannibalization of existing Paramount productSuper-premium market segment is highly influenced by market and technology changes on razor functionality and design.

Marketing strategy Analysis

Profit and Loss Forecast for Clean Edge Under Niche and Mainstream Scenarios (in $ Millions) Profit Projection as Percentage of Sales

Marketing strategy AnalysisNiche positioning offers higher projected profit comparatively to Mainstream Positioning.Key Highlights from Profit and Loss Forecast for Clean Edge in two (2) different Brand Positioning Marketing strategy AnalysisAdvertising and Promotion is projected to take up approximately 40% of the Total Cost. Based on the projection, Mainstream market positioning strategy requires three times more marketing effort (budget) as compared to Niche market positioning strategy.Operating CostNicheMainstreamProjectionYear 1Year 2Year 1Year 2Advertising & Promotions $ 15.00 $ 16.00 $ 42.00 $ 39.00 Key Highlights from Profit and Loss Forecast for Clean Edge in two (2) different Brand Positioning Advertising and Promotion Effort ($ Million) Marketing strategy AnalysisCannibalisation rate for Niche Positioning = 35%Cannibalisation Rate for Mainstream Positioning = 60%CannibalisationNicheMainstreamProjectionYear 1Year 2Year 1Year 2Total Cannibalisation $ 4.54 $ 10.72 $ 20.12 $ 41.02 Key Highlights from Profit and Loss Forecast for Clean Edge in two (2) different Brand Positioning Cannibalisation Rate ($ Million) Marketing solutionsTo launch Clean Edge as niche technology product for the first two years, and subsequently as a mainstream product.This will benefit Paramount to:Tap higher profit marginWin over shelf space at distribution channelReduce cannibalisation effect of existing productsA soft entry approach to super-premium segment through niche positioningWhere should the Clean Edge Razor be positioned?

Brand name positioning of Clean Edge Razor

As a niche product, Clean Edge should be distinguished from other brands, as well as Paramount existing line. Therefore, Clean Edge by Paramount will attract customers and reduce the cannibalisation impact to the Paramount Avail and Paramount Pro.